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Monday, March 24, 2014

A little bit more on Economic Growth

For companies, "growth" means that next year's profits must be
bigger than this year's profits. This imperative drives all manner of commercial
perversions, for instance, planned obsolescence. Also shoddiness.

Many Asian manufactured items are little more than pretend replicas.
They consume energy and materials to create items that look real but
are not fit for purpose. We are provided with screws whose heads give way as soon as any
torque is applied to them. Cutting tools that cannot take and hold
an edge.

British manufacturing would do well to look at producing durable if
expensive quality gear that can be repaired instead of disposed of
once wear has taken its toll.

Greens often rage against consumption. We must remember that consumption ranges from the necessary to the frivolous. As a doctor
I can state with absolute confidence that consumption of food and
water is vital for human life. Warm (but not overly warm) homes are
also vital to life. All of these things require consumption. We cannot do
without consumption.

After these life fundamentals, we need a variety of tools
and instruments (in the widest sense, to include things such as
transportation). Some tools are needed in order to support the vital
primary level of function (Water, food, warmth, shelter and waste
management) and some tools are in fact toys to play with - such as
musical instruments. Play is a vital part of humanity. We do need
some of these, but at a reasonable level, not the tsunami of
perishable goods ("stuff") that industry is throwing at us.

There is such a thing as natural greed
and competitiveness, but many millions are spent each year on
advertising to whip this human weakness up into a lather of desire. This advertising money is not committed by the advertisers just for fun. It is a
serious propaganda effort to bend our minds to consuming the item
advertised. It is good that we have policy to reduce advertising.

Now why is there a need for growth? Part of it, planned
obsolescence, is easy to understand. My sister has a functioning,
absolutely silent refrigerator that was built in the 1930s. I think
it may be an "Einstein" fridge. If consumer goods were made to last
like that, the market would become saturated, and manufacturers would drive themselves out of business. So things are designed to
need replacement.

But why does the market have to grow? Hoogendijk (Willem Hoogendijk, "The Economic Revolution", Green Print/Jan van Arkel, London/Utrecht 1991) finds one answer
in the creation of money through debt.

Hoogendijk says: Imagine two companies A and B, supplying the market
with widgets. They are in balanced competition, each having half of
the market. Now A takes out a loan, buys some machinery that drives
his productivity up. He lays off workers, and soon has 75% of the
market. B is therefore obliged to take out a loan to buy machinery
and lay off workers. A and B are in balance again - but now they
each have to service a debt, to pay interest. They are therefore
obliged to expand into other markets. Debt interest obliges them to
grow.

I would not like to say that debt interest is the only driver of
growth, but it is a significant driver of economic growth, and it is
good that Green Party policy does at last acknowledge this fact.

There are many other aspects to be considered, because economics is
a system, and systems are neccessarily multifactorial. As humans we
tend always to oversimplify, but at the same time, it is necessary
to hold on to those things that are certain.

Therefore I would like to reassert
these certainties:

1) Throughput of carbon and materials is the No 1 economic problem
that we face.
2) Growth of this system is the second problem, the icing on the
cake as it were
3) In making the transition to a zero-throughput, cyclical economy
that is structured as if people matter, we can promise something
near full employment, and, paradoxically, marked economic growth of the green sector of the economy.
4) Full employment helps to reduces inequality, (since the gap in
money and self-esteem between workers and unemployed disappears). This improves all manner of social problems.
5) Other measures (taxation of the super-rich) will further bring us
towards more equitable distribution of wealth, and that means a
happier and more healthy society.
6) One possible, immediately practicable method of stimulating the green sector of the economy is the Green Wage Subsidy.